Question: Question 2 Sammy Co. has a current cash flow (at time 0) of $5 m and pays no dividends. The present value of the company's

Question 2 Sammy Co. has a current cash flow (at time

Question 2 Sammy Co. has a current cash flow (at time 0) of $5 m and pays no dividends. The present value of the company's future cash flows is $10 m. The firm is entirely financed with equity and has $500,000 shares outstanding. Assume the dividend tax rate is zero. a. What is the share price of Sammy stock?4 b. Suppose the board of directors of Sammy Co. announces its plan to payout 50% of its current cash flow as dividends to its shareholders. How can Marcus Camp, who owns 500 shares of Sammy stock, achieve a zero payout policy on his own? +

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